OTTAWA — A federal watchdog’s new report highlights a series of problems in how Ottawa procures some of its $20 billion in annual goods and services, including complaints about sole-sourced contracts, government ignoring its own rules, and departments doing business with firms known for producing “inferior” work.

The report from the Office of the Procurement Ombudsman comes as the Harper government faces ongoing criticism for sole-sourcing the multibillion-dollar F-35 fighter jet program and its troubles with procuring billions of dollars worth of military trucks, search and rescue aircraft, and Arctic offshore patrol ships.

In his 2011-12 annual report quietly tabled this week in Parliament, Procurement Ombudsman Frank Brunetta exposes a number of ongoing problems — identified by both suppliers and federal employees — with how the federal government obtains goods and services from private-sector vendors.

The document highlights two “unexpected areas of concern” with federal procurement, including vendor performance and “the disparate nature” of procurement documents. But it also identifies problems with lack of training among procurement officials, questionable sole-sourcing of contracts among more than 100 federal departments and agencies, and concerns that government favours certain suppliers with its purchasing.

“Suppliers have raised the issue of firms that continue to obtain federal contracts despite being known within the community for providing inferior goods or services. Some question why the government continues to do business with these types for firms,” Brunetta says in the report.

“Likewise, procurement officials have voiced frustration with executing lengthy procurement processes only to be faced with the prospect of having to accept a winning bid from a known underperforming supplier.”

Some small and medium-sized businesses complained the patchwork system of procurement rules throughout the federal government is a barrier to doing business, the report says, while government officials highlighted the inefficiencies of preparing different procurement documents for similar services.

“This fragmented approach within the federal government is allowing suppliers identified as underperforming by one department to successfully bid and be awarded contracts from other departments,” the report says.

The ombudsman’s office is responsible for reviewing complaints on the awarding of federal contracts for goods below $25,000 and for services less than $100,000 (which amounts to 90 per cent of all federal contracts). However, the office can review any complaint on the administration of a federal contract for goods and services, regardless of dollar value, as well as examine the purchasing practices of federal departments and agencies to assess fairness, openness and transparency.

Many of the complaints reviewed by the ombudsman were proven unfounded or dropped by the complainants, according to the report. The ombudsman says the government has made strides in recent years in improving its purchasing and overall practices, but he also noted there remains a lack oftraining among federal officials responsible for procurement.

Six years after an optional certification program was introduced, only 26 of the approximately 3,200 procurement specialists working in the federal government have been certified at the program’s first of three levels, and none have been completely certified.

The report says a number of suppliers who’ve complained about federal procurement were afraid to identify the specific departments because of “a perception or a suspicion that complaining might jeopardize future business opportunities.”

Officials in the office of Public Works and Government Services Minister Rona Ambrose said the report recognizes several positive initiatives, including increased consultation with suppliers and improved debriefing with unsuccessful vendors.

“We remain committed to procuring goods and services in a manner consistent with our principles of openness, fairness, transparency, and value for Canadian taxpayers,” Fernando Minna, a spokesman for Ambrose, said Thursday in an email.

“Our government is always looking for ways to improve our procurement practices, in consultation with Canadian industry, so that we can maximize job creation, support Canadian innovation and bolster economicgrowth.”

Brunetta, who was appointed ombudsman by Ambrose in 2010, was unavailable Thursday for comment.

In one complaint, a competition for a federal contract was limited to companies located in the National Capital Region, when the contract was subject to the Agreement on Internal Trade that is meant to reduce trade barriers within Canada. The resulting contract was terminated after the ombudsman inquired about it.

One supplier who complained to the ombudsman about the awarding of Advance Contract Award Notices (which announce a department’s intention to direct a contract to a specific supplier) was the “tip of the iceberg” in the misuse of the ACANs for sole-sourcing contracts.

The Office of the Procurement Ombudsman released three reviews in the 2011-12 fiscal year examining potential “systemic issues” in government procurement practices, including one analysis based on a complaint about favourtism and tailored requirements for advance contract awards issued by the Public Service Commission to specific suppliers.

The ombudsman found that in each of the four specific ACANs it reviewed, the Public Service Commission claimed only one individual could perform the required work. Yet, the PSC “knew there was more than one supplier who could do the work and therefore had no basis for directing the four contracts to those individuals or for using the ACAN process.”

A broader ombudsman review of more than 400 ACANs published between July 2011 and January 2012 identifiedcases “where the ACAN did not appear to have been used as intended and/or policy requirements did not appear to be fully respected.”

The review found that just over half of the 442 ACANs examined contained enough information to allow another supplier to submit a statement of their capabilities, and less than one-quarter appeared to be “a legitimate attempt” by the contracting department to test the market for an alternative supplier.

“The results of this analysis raises questions about whether the policies governing the use of ACANs are sufficiently explicit and unambiguous to allow ACANs to be used as intended,” the report says.

NDP deputy finance critic Guy Caron said the report highlights a troubling trend in government sole-sourcing contracts, when more competition should be promoted to ensure government receives good value for the goods and services it purchases.

“The fact that we have to have competition means that we should rely less and less on those advance contracts, and we do more and more, which to me signifies a problem,” Caron said.

“What this underlies is the need for more transparency and the need to actually lower the costs of those various goods and services towards competition. I really don’t understand why government is actually going toward more of those (ACAN) contracts.”

Senior Parliament Hill reporter for the Ottawa Citizen, politics junkie, wannabe pro golfer and someone who has wordsmithed at newspapers in Ontario, Alberta and Saskatchewan. I've covered politics at... read more every level, including city hall in Ottawa and Calgary, the Alberta legislature in Edmonton and now back in Ottawa covering the Hill.View author's profile